A meeting of eurozone finance ministers meeting yesterday faced pressure to increase the size of a 750 billion euro (US$1,006 billion) safety net for crisis-hit members in order to halt contagion in the single currency bloc.
IMF managing director Dominique Strauss-Kahn was to call on the ministers to boost the facility and urge the European Central Bank (ECB) to step up its purchases of bonds to stem the crisis, an IMF report stated.
The IMF report and the situation on European debt markets were to be discussed at length, a eurozone source said, at the regular meeting of the so-called Eurogroup.
That will be followed by a meeting today of ministers from the broader 27-nation EU who are expected to formally approve an 85 billion euro aid package for Ireland and discuss the reform of EU budget rules.
Bond buying by the ECB helped calm markets at the end of last week, lowering the borrowing costs of countries like Portugal, Spain and Italy which have come under intense market pressure in recent weeks.
However, that may have been only a temporary respite for the 16-nation currency bloc, which some experts believe may not survive in its current form if the debt crisis rages on much longer.
Ewald Nowotny, a member of the ECB governing council, said on Austrian television that the eurozone economy had become so closely intertwined that splitting off peripheral states with debt problems would be counterproductive.
“Europe has already grown together so much than an amputation would have massive disadvantages for both sides,” he said.
Luxembourg Prime Minister Jean-Claude Juncker and Italian Finance Minister Giulio Tremonti called for the issuance of joint European sovereign bonds — or “E-bonds” — to assert the “irreversibility of the euro.”
The pair, in a column published yesterday in the Financial Times, said the creation of a European debt agency that could issue such bonds would be possible as early as this month if the body that represents member states endorsed it.
The IMF report says a recovery in the eurozone, led by strong growth in its largest economy, Germany, could “easily be derailed” by renewed market turmoil and describes pressure on so-called peripheral euro countries as a “severe downside risk.”
The report argues that there is a “strong case” for boosting the size of the EU/IMF rescue facility and using the funds more flexibly, including to support banks.
However, Spanish Economy Minister Elena Salgado said increasing the size of the fund was “not the question for the moment.”
In an interview with French business daily Les Echos, she said Spanish economic fundamentals were sound and the country would not appeal for financial support from the aid mechanism.
The IMF paper also urges the ECB to expand its bond purchasing program until systemic uncertainties recede.
ECB President Jean-Claude Trichet said after a policy meeting of the central bank on Thursday that extraordinary measures to combat the crisis would remain in place, but did not signal any increase in the bond purchase program as some economists had predicted.
The bond buying is controversial within the bank’s governing council and influential Bundesbank President Axel Weber called earlier this year for it to be scrapped altogether.
The German government has resisted calls for an increase in the EU rescue facility, aware that German taxpayers would have to shoulder the biggest share of any additional bailouts, but Berlin could be forced to drop its objections if market pressures build this week.
Spain has taken aggressive action to ease investor concerns about its finances, announcing a series of measures last week, including plans to bring forward pension reforms, raise tobacco tax and cut wind power subsidies.
Portugal, widely seen as the next eurozone “domino” at risk of a bailout, has resisted any new measures on top of a tough budget for next year approved last month.
In a crucial week for the currency bloc, Ireland’s deeply unpopular government faces a parliamentary vote on its budget for next year. Although it is expected to pass, opposition parties have vowed to renegotiate the terms of the country’s bailout after an election early next year.
Stephen Garrett, a 27-year-old graduate student, always thought he would study in China, but first the country’s restrictive COVID-19 policies made it nearly impossible and now he has other concerns. The cost is one deterrent, but Garrett is more worried about restrictions on academic freedom and the personal risk of being stranded in China. He is not alone. Only about 700 American students are studying at Chinese universities, down from a peak of nearly 25,000 a decade ago, while there are nearly 300,000 Chinese students at US schools. Some young Americans are discouraged from investing their time in China by what they see
Taiwan Transport and Storage Corp (TTS, 台灣通運倉儲) yesterday unveiled its first electric tractor unit — manufactured by Volvo Trucks — in a ceremony in Taipei, and said the unit would soon be used to transport cement produced by Taiwan Cement Corp (TCC, 台灣水泥). Both TTS and TCC belong to TCC International Holdings Ltd (台泥國際集團). With the electric tractor unit, the Taipei-based cement firm would become the first in Taiwan to use electric vehicles to transport construction materials. TTS chairman Koo Kung-yi (辜公怡), Volvo Trucks vice president of sales and marketing Johan Selven, TCC president Roman Cheng (程耀輝) and Taikoo Motors Group
MAJOR DROP: CEO Tim Cook, who is visiting Hanoi, pledged the firm was committed to Vietnam after its smartphone shipments declined 9.6% annually in the first quarter Apple Inc yesterday said it would increase spending on suppliers in Vietnam, a key production hub, as CEO Tim Cook arrived in the country for a two-day visit. The iPhone maker announced the news in a statement on its Web site, but gave no details of how much it would spend or where the money would go. Cook is expected to meet programmers, content creators and students during his visit, online newspaper VnExpress reported. The visit comes as US President Joe Biden’s administration seeks to ramp up Vietnam’s role in the global tech supply chain to reduce the US’ dependence on China. Images on
New apartments in Taiwan’s major cities are getting smaller, while old apartments are increasingly occupied by older people, many of whom live alone, government data showed. The phenomenon has to do with sharpening unaffordable property prices and an aging population, property brokers said. Apartments with one bedroom that are two years old or older have gained a noticeable presence in the nation’s six special municipalities as well as Hsinchu county and city in the past five years, Evertrust Rehouse Co (永慶房產集團) found, citing data from the government’s real-price transaction platform. In Taipei, apartments with one bedroom accounted for 19 percent of deals last